Definition of angel investment

Angel investments are typically the earliest equity investments made in startup companies. Angel investors are almost always wealthy individuals and commonly band together in investor networks. Often these networks are based on regional, industry, or academic affiliation.

Angel investors are often former entrepreneurs themselves, and typically enjoy working with companies at the earliest stages of business formation. For this reason, sometimes angel investors fund startups before the company has significant number of employees, and before there is a completion of a proof of concept of the idea that they intend to commercialise.

Angel investors are typically former entrepreneurs who have experienced success in their ventures, and wish to continue working with startups in a particular industry (or geographical region) even though they have exited the entrepreneurial ventures that made them wealthy.

ExampleAlthough it is difficult to obtain comprehensive data on angel investments, we do know that they play an important role in the business creation process. Many household names, like Google, PayPal and Facebook were financed in their earliest stages by angel investors. [1]